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Monday, March 10, 2008


Love Potion # 9

The NY Governor's resignation may be imminent tonight, as it appears he was customer # 9 served by a prostitution ring in D.C. last month. Though clearly a shocking development, it fits a pattern of prosecutorial overreach and arrogance by local, state and federal prosecutors in recent years. Mr. Spitzer made his name by criminalizing business activities which bordered on the everyday. Though some of these activities arguably cost consumers money, most of the alleged "crimes" would have been considered either victimless, or unfortunate corporate or executive excess, but hardly abhorrent. However, once focused on a target, such as the Greenberg's or Mr. Grasso, Spitzer was ruthless and relentless. The guilty pleas he extracted were generally negotiated, not proven in court, with the threat of corporate indictments hanging over the victims heads (and a corporate indictment, as we know from the Anderson case, is a virtual death sentence). When the intended victims (such as Greenberg and Grasso) refused to knuckle under, Spitzer pressured their Boards to terminate them, but then allowed them to twist in the wind without a trial.

We have also seen prosecutors abuse their positions in Alabama, North Carolina and Connecticut to name a few. Democrats have not had a monopoly on the trend - even Rudy Giuliani's ultimate batting average on the insider trading prosecutions was very poor.

Unfortunately, it is fairly easy for AG's to ride their initial publicity to higher office before their cases are concluded. What you typically get is the "steamroller" (as Spitzer characterized himself) bringing his arrogance to an executive position, where it often doesn't work (since compromise is called for in our system). You also get men behaving badly, as they develop a mentality that says they are the law.

I guess it is possible that Mr. Spitzer will try to tough this out, as President Clinton did. However, he is facing the annoying technicality that he has broken the law and may be prosecuted. So even if it turns out that he is beyond embarrassment, he may not be able to continue in office anyway. Clinton did not clearly violate the law until he committed perjury, and his impeachment trial for that was political, not criminal (he agreed to disbarment to settle the criminal charge).

It was sad to see the Governor's apology today, but the people that he hurt most other than his family were his loyal followers, who put lucrative careers in private industry to the side so they could help him govern New York. Those are the people Elliot Spitzer abandoned with his foolish and arrogant behavior, and I hope they land on their feet if he does resign, as most expect.


William F. Buckley was one of the pioneers of modern conservative philosophy, a set of principles that built on the teachings of Friedrich Hayek, and found its political voices in Barry Goldwater, Ronald Reagan, and Newt Gingrich. Buckley was easily the most erudite of the conservative media; his charm and sense of humor somehow broke through the upper crust mannerisms of his lockjaw speech, and ten dollar vocabulary. Engaging political and philosophical opponents on Firing Line, Mr. Buckley had a way of scoring his points while allowing his guests an ample forum and treating them with unfailing respect and friendliness. His heirs are Steve Forbes, Paul Gigot, and Bill Kristol.

Buckley's magazine, National Review, was of course, more widely quoted than read by the country's left - leaning academic and media elites. As a writer, he was humorous, though I felt his syntax and style were overrated - he could sometimes be virtually ungrammatical. No matter. Larger than life, he was capable of creating his own rules, and pressed on, always promoting the cause and the policies he believed would benefit America economically, culturally, and spiritually.

One of his great gifts to us is his son Christopher, the hilarious editor of Forbes Life and gifted columnist/author in his own right. WFB left the world better for his contribution and it's nice to know he didn't get cheated during his successful, entertaining, and full lifetime.


The people who have been predicting economic calamity and depression are looking smarter every day. We don't seem to have the horses in the right places who can overcome the debt lockdown, so I am starting to agree with those who say it just has to run its course, however, painful. Our activist Fed Chairman needs to stop and take stock for awhile. Unfortunately, I don't think he believes in that approach, so he is going to keep flooding the banks with money until they start lending again, and that means a pretty serious inflationary period, with continuing (and worsening) dollar weakness, and much higher interest rates at the long end. And still, I follow my formula, though not sure it will still work in this environment. On Wednesday, I bought 400 shares of Limco Piedmont (LIMC) for my IRA at what then looked like the bargain price of 6.08. Of course, all you have to do is wait a couple of days in this market and yesterday's bargain won't look so good anymore. Today, it was back to the well on Blockbuster (BBI) for 700 shares for my IRA at 2.86. I must say, I am getting pretty good executions on the openings from my discount broker lately, which was not always the case previously. Blockbuster turned in a "blockbuster" quarter, so maybe they finally have a management team in place that can develop a sustainable business model.

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